The African Growth Miracle?

Measures of real consumption based upon the ownership of durable goods, the quality of housing, the health and mortality of children, the education of youth and the allocation of female time in the household indicate that sub-Saharan living standards have, for the past two decades, been growing in excess of 3 percent per annum, i.e. more than three times the rate indicated in international data sets.

National income statistics, which in this context are untrustworthy, indicate a growth rate of only about one percent. Contra Young, here is a much less positive perspective, excerpt:

Yet this is nothing like the required economic advancement built around an actual or dominant “middle-class” milieu as commonly and quite wrongly suggested.

Africa’s burgeoning demography will challenge this future. Subsistence economies remain its anchors, and the alleged “demographic dividend”, that some blithely portray as a “driver”, will mostly transform into one of rising unemployment and growing informalisation.

Those who observe the lack of significant gains in African agricultural productivity often prefer the negative interpretation. Too many of the observed progress seems to come from mining wealth. In a recent short essay, Michael Lipton sums it up:

Michael Lipton correctly diagnoses the problems, but not (in my opinion) the cure. Will smallholder production of staple crops really work in a globalized commodity environment? I think not. That genie is not going back in the bottle.

I do see a role for smallholder production of specialty crops for export. This accomplishes many of Lipton’s non-economic goals, and brings in foreign exchange to boot. See cocoa production in West Africa, mostly by women, as an example. The supermarkets that African growers need access to are in Europe and America, not in Africa.

You need to tailor the economy to the skillsets of the population. Africans will never be competitive in engineering, manufacturing, software, or any industry requiring abstract reasoning. If you take Africans off the land you leave the majority with nothing productive to do – in much the same way as African-Americans by and large have a very hard time finding productive employment in our post industrial economy. Pretending that Africans are East Asians is a sure way to destroy the continent.

Re “faster GDP growth in Africa since 2000 is mainly a mining boom”, McKinsey’s recent “Lions on the Move” report concluded that only ~25% of African GDP growth from 2000-2008 came from natural resources sectors. Has someone else run the numbers and come to a different result?

One thing to keep in mind is that Africa is a pretty huge continent, and what’s true for one countries isn’t necessarily true for the continent. GDP growth has been averaging at above 10% for the last 6 years. GDP growth has been high but volatile for the past 15 years. Its not just gdp growth either. Exports have increased more than six fold and manufactured exports (they still make up a small part of exports) have grown even faster. While gdp growth in the resource poor countries has been poor in general, several resource poor countries, including Rwanda and Uganda, have seen relatively high growth rates over the last decade and a half.

The economic figures are a proxy for what people want, and people quite frequently want to not be dead. So I would look directly at life expectancy to get an idea of how things are improving and it does appear to have shown an improvement on average in recent years:

To be fair, in Europe it also left behind… modern Europe. Africa is pretty much all severe unemployment, poverty and crime anyway.

The second problem is why it won’t leave behind modern Europe in Africa; they just don’t have the social capital to effectively exploit their resources into sustainable economic growth. They fundamentally don’t understand why they can’t just take all the stuff by force. It’s very hard to build a system that aligns incentives and then get everyone to buy in, the way economies work in the OECD.

Not sure what you’re saying here, Morrissey. African IQs are currently comparable to white Americans in the 50’s (African average IQ is about 81 or so, not 75) but the USA in the 1950’s was reasonably child rape light, so I don’t think there is a direct link between IQ and child rape. Other causes are likely to be responsible. For example, in my country child rape is often linked to religion.

Several of his “mistakes” in ‘Tyranny of Numbers’ do not appear innocent. His results always rely on ‘sleight of hand’ deceptions. Read him in his own words from Gold into Base Metals…: “Like many magicians and alchemists, this paper buries its trickery…” Indeed.

I can’t think of an economist with any less credibility. Haven’t looked at his Africa paper in two years but I knew I didn’t like it.